Patrice Motsepe's African Rainbow Capital is reportedly in talks with the Commonwealth Bank of Australia to become the sole owner of digital bank TymeDigital
Patrice Motsepe's African Rainbow Capital (ARC) is reportedly in talks with the Commonwealth Bank of Australia (CBA) to become the sole owner of one of SA's new digital banks, TymeDigital.
Tyme Digital is one of five new banks expected to launch in South Africa in 2018 and 2019. The others include Discovery’s full service bank; former FNB CEO Michael Jordaan’s Bank Zero; Postbank’s play as a retail bank, African Bank’sl aunch of transactional banking; and the Young Women in Business Network’s mutual bank.
CBA acquired TymeDigital, a South African online lender then trading as TYME, in 2015 in a deal worth $40 million. Since then and after securing a banking licence from the SA Reserve Bank, CBA has pumped around $1 billion into developing the digital bank’s technology and systems infrastructure required to become a branchless bank.
Despite these significant investments, CBA has decided to review its operations in the country with the intention of exiting and this has created the perfect opportunity for Motsepe’s ARC to pick up a majority business in the digital bank, which is set to be launched before the end of the year.
“TymeDigital by CBA is on track to launch its full digital banking offering in South Africa by the end of this year. As the business continues to gain momentum, we have begun exploring the most suitable long-term structure for TymeDigital,” a spokesperson for CBA was quoted telling Street Talk.
ARC currently owns a 10% share in the bank and acquiring CBA’s controlling stake would be just what Motsepe needs to fulfil his ambition of establishing a black-owned, black-controlled bank.
TymeDigital currently operates as a mobile money transfer service and the launch of its full digital banking service is expected to disrupt the banking industry in South Africa.
TymeDigital CEO Sandile Shabalala previously said the bank would be targeting the emerging middle-class market, as well as the underserved small- and micro-sized business markets.
He said being a digital bank gave them a competitive edge as far as operational costs are concerned and because they will be able to keep costs low, these savings would be passed on to its customers.